The last 12 months have seen a significant increase in the number and scale of industrial disputes across the country. Many of these disputes have occurred in the construction and infrastructure industries and have caused significant disruption both to construction companies and the broader community. Last year’s Grocon dispute, which had its epicentre in Lonsdale Street Melbourne but spread across the country, is just one such example.

A number of cases which arose out of these disputes have resulted in changes to the law regarding the manner in which companies can lawfully respond to the conduct of their employees during industrial disputes. In particular, the extent to which a company can lawfully discipline a union member or delegate has been the subject of a number of cases.

In addition, the Victorian Government has reacted to what is perceived to be the militancy of union action in that state by enacting the Victorian Implementation Guidelines to the Code of Practice for the Building and Construction Industry (Guidelines). Following the implementation of the Guidelines, both the New South Wales and Queensland governments have sought to introduce similar guidelines. The effect of the Guidelines is starting to be felt and their legitimacy has been challenged in the Federal Court by the CFMEU.

In this article we review the latest developments in relation to disciplining employees during industrial disputes and provide guidance for employers on how to deal with this complex issue.

Disciplining union members or delegates

The Fair Work Act 2009 (FW Act) prohibits an employer from taking any kind of “adverse action” against an employee (for example dismissing, warning or otherwise disciplining them) because the employee is a union delegate or because the employee has engaged in any “industrial activity”. These prohibitions are contained in the FW Act’s “general protections” provisions. Under these provisions, if an employee can establish that he or she has been subjected to “adverse action”, then the burden of proof shifts, and the employer must prove that it did not take such action because of the employee’s union status or industrial activity.

Happily for employers, the High Court recently indicated that this prohibition does not make union delegates a protected species when it unanimously rejected a Federal Court finding that, if the employee’s alleged misconduct occurred while purportedly performing union duties, it was virtually impossible for an employer to divorce the union activity from the employee’s conduct during the course of the employment.

Subsequent to the High Court’s decision, two separate Federal Court judges have handed down decisions, both of which related to the question of whether disciplining or dismissing employees for misconduct at a picket line can amount to a breach of the general protections provisions of the FW Act.

Facts

Both cases involved applications by the CFMEU on behalf of individual members alleging that BHP Coal Pty Ltd (BHP) had taken adverse action against the employees under the FW Act, by disciplining them and ultimately terminating their employment due to their conduct at a picket line.

In the first case, the employee, Mr Meacle, was dismissed from his employment for yelling the words “Scab c**t” at a fellow worker and former union member that crossed the picket line. In the second case, the employee, Mr Doevendans was dismissed from his employment for holding and waiving a sign at a picket line with the words “No principles, SCABS, No guts”.

Mr Meacle’s dismissal was confirmed by the Court, while Mr Doevendans was reinstated to his employment.

Decisions

In determining whether BHP had taken unlawful adverse action against Mr Meacle, Justice Lander considered evidence given by BHP’s personnel involved in the decision to terminate Mr Meacle’s employment and found the reason for the termination was because BHP believed he used the words “scab c**t” with the intention of “humiliating and harassing [another employee]” which was a breach of BHP’s workplace conduct policy.

Justice Lander distinguished between the act of protesting and the act of yelling the words “scab c**t”, which he said “was inconsistent with the purpose of the picket line, which was not designed to intimidate or put people in fear”.

In the case involving Mr Doevendans, while BHP conceded that Mr Doevendans was engaged in industrial action, it argued he was not dismissed because of this. Rather, BHP argued that Mr Doevendans was dismissed for his act of holding and waving a sign at the picket line with the words “No principles, SCABS, No guts”, which was in breach of BHP’s workplace conduct policy. However, Justice Jessup found that Mr Doevendans’ holding and waiving of the scabs sign was conduct by way of participation in a lawful activity organised by an industrial association. Accordingly, an order for Mr Doevendans’ reinstatement was made.

The differences between the facts in these two cases are minor and may seem difficult to reconcile. Essentially, the bottom line for employers is that the use of the word “scab”, or other potentially offensive but industrialised terms, at pickets and protests is likely to constitute industrial activity or action advancing the views and interests of an industrial association and, therefore, will be protected under the FW Act. However, where the use of those terms goes beyond the limits of an industrial campaign, that protection will be diminished. Where these limits sit will depend on the circumstances of a particular case.

The Guidelines

The Guidelines came into force on 1 July 2012. They apply to all public building and construction work that is the subject of an expression of interest or request for tender on or after the 1 July 2012.

The Guidelines prohibit enterprise agreements from including provisions that, among other things:

  • prescribe ratios of permanent, temporary or casual employees;
  • Set “one-in, all-in” arrangements, such as those that might apply to overtime; and
  • restrict labour supply or conditions, such as by requiring employers to consult unions, or gain their approval, for the number, source, type or payment of labour.

The Guidelines operate in addition to the Federal Government’s Implementation Guidelines for the National Code of Practice for the Construction Industry, which was recently codified in legislation by Minister Shorten (National Code). However, the Guidelines are more onerous than the National Code and currently preclude many large construction companies from tendering for Victorian government work because of the terms of those companies’ enterprise agreements.

Because the Guidelines effectively prohibit “union friendly” clauses in agreements, the CFMEU issued proceedings in the Federal Court seeking to stop the Victorian Government from applying the Guidelines in awarding tenders to construction companies. In two separate proceedings, the CFMEU alleged that demolition company Eco-Recyclers and major builder Lend Lease lost out on tenders - the latter for the significant Bendigo Hospital Project - because of unionfriendly clauses in their agreements. The CFMEU alleged that the Guidelines themselves breach the adverse action provisions of the FW Act.

While the Government contested both Federal Court proceedings, on 5 April 2013 Victorian Premier Denis Napthine announced Lend Lease as the preferred bidder for the Bendigo Hospital Project. The Government had also given undertakings to the Court that it would not refuse to award the Bendigo Hospital Project contract because of any non-compliance with the Guidelines.

Decisions in both proceedings were handed down on 17 May 2013, with the Federal Court finding that the Victorian Government had, in seeking to enforce the Guidelines, breached the adverse action provisions of the FW Act. The Government has indicated that it will appeal the decisions. If confirmed on appeal, the decisions will effectively render the Guidelines unenforceable. This will have obvious consequences for the similar guidelines enacted in New South Wales (which are due to commence on 1 July 2013) and Queensland (which have been the subject of consultation but which are yet to be enacted).